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Sri lanka News – Negotiations are under way with Sri Lanka’s private creditors about debt restructuring, with a case filed by one international sovereign bond (ISB) holder now in the process of being resolved, President Ranil Wickremesinghe said.

Responding to a question by MP Wimal Weerawansa in parliament on Thursday November 10, Wickremesinghe said Sri Lanka’s private creditors have accepted the terms of the island nation’s ongoing talks with its multilateral and bilateral debt holders.

“There was one court case, which is now at a stage of being resolved. Once bilateral debt has been discussed, we don’t think there will be a major issue with private credit,” the president said.

“The talks have now begun,” he added.

Wickremesinghe did not confirm it, but it is likely that he was referring to Hamilton Reserve, a St Kitts and Nevis based bank, which filed suit in the Federal Court of New York Southern District against Sri Lanka in June this year.

Related:

Sri Lanka sued by holdout Hamilton Reserve, other bondholders form group

MP Weerawansa also sought clarification on what would happen to Sri Lanka’s recently reached deal with the International Monetary Fund (IMF) for a 2.9 billion dollar extended fund facility (EFF) if one of the bilateral lenders declines to restructure.

“We have discussed what happens if one country opposes or doesn’t agree. There are only two options: cut off debt, or extending the payback period by 10 to 20 years. One of those two options have to be discussed, and we can then arrange for one of them,” said Wickremesinghe in response.

Meanwhile, opposition legislator Lakshman Kiriella asked the president if the IMF agreement would be tabled in parliament before the budget speech for 2023.

“The IMF says don’t release it till we finish this round of negotiations,” replied Wickremesinghe.

“Don’t worry. I won’t put anyone into trouble,” he added, in a lighter vein.

The president said the agreement has been signed but the Paris Club member states and India and China must all agree.

“If there is a change, we’ll come back and tell you. But so far we don’t know what China and India has to say,” he said.

President Wickremesinghe on Wednesday discussed debt management with IMF Managing Director Kristalina Georgieva at the COP27 climate summit in Egypt.

Sri Lanka in September reached staff level agreement with the IMF on a 2.9 billion US dollar bailout package over a four year period, pending IMF board approval.

Though it was speculated earlier that board approval would be given by this December, it now seems likely that it will be further delayed.

Sri Lanka is going through its worst currency crisis in decades with millions of people affected by skyrocketing prices and shortages. However, the runaway inflation seen in the preceding months has now dropped to 66 percent after the central bank spiked policy rates, though prices remain high. (Colombo/Nov10/2022)

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